Webjet shares fall on clouded profit outlook

The online travel booking service Webjet has slumped almost 10 per cent after it warned of ‘‘very low growth levels’’ in the leisure travel market over the last four months.

Underlying the challenging trading conditions facing travel companies, Webjet said on Wednesday that it was concentrating on ‘‘managing for margin’’ in all parts of its business.

Webjet has issued guidance for an increase of at least 10 per cent in net profit after tax to almost $15 million for this financial year. The forecasts exclude the cost of setting up a new accommodation website in Dubai.

But its commentary about trading conditions appears to have spooked investors with Webjet shares falling 40 cents to $3.73 on Wednesday morning.

The managing director, John Guscic, said the leisure travel market in Australia had shown ‘‘very low growth levels at both a unit price level and transaction volume levels’’. Domestic prices had declined on a month-by-month basis, he said.

In an environment where consumers are cautious about spending, the travel company has decided to boost its spending on advertising by $1 million in the first half of this financial year.

Webjet warned in August when it released its full-year results that there been a noticeable slowdown in demand across the entire industry due to consumers becoming more cautious.

The company also said previously that the strong Australian dollar was not been stimulating demand for travel like it had a year ago.

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